RCom blames Bharti Infratel, GTL Infra, DoT for Aircel deal scrapping

We are in deep discussions with Brookfield, but now the Aircel angle is not there because of which the value will be different. Deal is certainly on.Devina Sengupta | ET Bureau | Updated: October 03, 2017, 09:06 IST

MUMBAI: Reliance Communications has blamed delays due to “vested interests” of companies such as Bharti Infratel and GTL Infrastructure's Chennai Network Infrastructure besides the telecom department’s stand that the merger with Aircel deal needs a Supreme Court nod as major factors behind the deal running aground. In an interview with ET's Devina Sengupta, Executive Director Punit Gargsaid RCom has now consulted lenders on its alternative debt reduction plan which do not require the multiple clearances. He added that while the tower unit stake sale to Canada's Brookfield is on track, the two companies are in talks on revised valuations since Aircel tenancies are off the table. Edited excerpts:

What made you call of the merger?

The decision has been taken mutually. We filed for approval in the NCLT, but there were vested interests such as companies like Bharti Infratel, GTL, CNIL. As tower companies, they would have benefited from the merger but they decided to oppose and now it would hurt them. They would have dealt with a much stronger and bigger company but now they would be where they are.

The hyper competitive market scenario, given the financial stress in telecom that was the flavour of the season in last couple of quarters, there was restrictions on the bank financing as well. So general atmosphere was negative. Then, DoT had submitted affidavit in NCLT to seek clarification on merger with Aircel from Supreme Court given that SC had put stay /restrictions on selling trading of Aircel’s spectrum. So, they wanted clarity on that and for us, it was getting out of time because we needed to get it done quickly enough. Unsecured creditors then also filed objections before the NCLT. All these factors delayed the deal by 3 months. When we announced SDR plan in June, we did not anticipate the delay. Both parties sat together quietly and decided to choose our own course.

What is next step for Rcom as it tries to adhere to the standstill agreement with lenders?

We announced our plan that we will continue monetising our towers, fibre, real estate and in addition, we will be optimising the spectrum portfolio and these would generate proceeds over Rs 25000 crore and for these, we do not need court, DoT approvals or clarification from SC. So, we will do the deals in a time frame that will be determined and reduce debt as was envisaged earlier. Rcom would continue to focus on 4G strategy on the current spectrum sharing, ICR arrangement with Jio and in addition, our profitable B2B segment which includes global and India enterprise, data centre business and global submarine cable network.

Are you looking to sell or trade spectrum?

We will be 4G spectrum company and the spectrum that does not fall under the gambit of 4G, we will use as part of optimisation plan and do whatever required under sharing and trading guideline of DoT.

Have you started talks with any telco on monetisation/trading of spectrum?

We are in SDR and any process is transparent and open process. We have consulted lenders on our alternative debt reduction steps.

How confident are you of lenders backing your alternate deleveraging plans?

The plan published on Sunday has been done after consulting with lenders

What is the fate of your tower unit stake sale to Brookfield?

We are in deep discussions with Brookfield, but now the Aircel angle is not there because of which the value will be different. Deal is certainly on.

What is the timeline for fiber, global business assets to be monetised?

The transparent process will begin soon along with banks to monetise that. We will publish the plan in next few weeks.

What is the status of the case of insolvency that Ericsson has filed claiming their dues? Any out of court settlement possibility?

Our lawyers are fully prepared for the case that will come up on 6th of October . We will come to know of their strategy whether they are fighting or withdrawing the case.You can never rule out anything. Conversation is on between the two companies and let us see how it progresses.

Has RCom reached out to its employees ?

People have been communicated through the open house as well as through webcasts. B2B was never affected, the wireless guys were looking at working for a larger company but at the same time both sides looked at each other differently. Overall, we are 7000 people and 65% of them are in wireless business.

Is there any chance of RCom and Aircel reviving deal talks?

Any combination is possible. Both parties have exhausted, become impatient because of delays for reasons beyond either of our control. At this moment we need to move on and focus on our plans to ensure our companies are profitable an do whatever required to satisfy our lenders.

How do you expect policies at government to change for mergers like these to go through ?

Some changes have been made and some need to be made. Going by our SSTL merger that has taken 22 months. Major hindrance was a shareholder who held up the process for 22 months. Through NCLT process, that has been addressed that a single shareholder with 1/2 or 5 shares cannot hold a company's merger process to ransom. Window of 45/60/90 days may ultimately speed up M&As but it would need lot of small steps. NTP (New Telecom Policy), based on experience, will make it swifter and a smoother process.

The Telecom Regulatory Authority of India (Trai) pulled up Bharti Airtel and Vodafone Idea for warning subscribers of certain plans that their SIM cards would be deactivated if they do not recharge their pre-paid accounts though these subscribers had the minimum required balance.